Attracting Venture Capital to Unlock Growth

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Looking for investment capital to help your business achieve financial stability?  What does it take to unlock growth?  Are you prepared and what are investors looking for?
 
As part of Crain’s Detroit Homecoming, these questions were discussed Friday morning at a session focused on unlocking growth and attracting capital among high-growth investors and minority entrepreneurs.

The well-attended event, presented by the Goldman Sachs 10,000 Small Businesses Program at Wayne State University, highlighted three Detroit-area businesses.  It was an opportunity for local Detroiters and “expats” to intermingle and hear from local entrepreneurs and a venture  capitalist with respect to attracting venture capital funding. 

Metro Detroit entrepreneurs highlighted included Clifford A. Brown, Managing Partner, Woodborn Partners; James Norman, Co-Founder and Pilotly and Michael Duncan, Founder & CEO, Bankjoy and the featured speaker was venture capitalist Kesha Cash, founder and General Partner of Oakland, CA-based, Impact America Fund (IAF).
I sat down with Cash to discuss venture capital opportunities and challenges confronting minority-owned businesses.
IAF invests in companies utilizing technology to gain business efficiencies while identifying VC opportunities in under-served communities.
Cash says, “The underlying business is less about the technology itself and more about the community around the technology, meaning how do you get excited to use technology to update infrastructure or find efficiencies within an existing business model?”
The firm focuses on technology utilization because it brings transparency and solutions to business challenges and identifies opportunities across various market segments and a spectrum of diverse communities.
And she believes Detroit’s an attractive market because its entrepreneurial foundation continues to be strengthened by resolve, enthusiasm and a burgeoning small business ecosystem.
“There is a real focus on providing or building an ecosystem around entrepreneurship,” she says, “And having inclusive events are essential in attracting people to and back to Detroit.”
Because of this enthusiasm and an invitation from Jill Ford, Detroit’s head of Innovation & Entrepreneurship, Cash wanted to come to the Motor City to hear and see the city’s progress first-hand while spreading her firm’s message of assisting and supporting entrepreneurs in attaining financial stability and achieving growth.
While all businesses go through various cycles, what happens when your business faces a cash crunch and business instability?  
 
Cash offered the following advice:  
  • Take a step back to have an opportunity to reflect and to analyze how cash is being spent
  • Understand who your key customers are based on profitability.  In other others, you may not be serving the most profitable customers based on your business model and thus, can be a drain on profitability,
  • Have the opportunity and your business shifted and evolved over the last five years?  Many entrepreneurs have not adjusted based on market dynamics, such as demand and competitive forces, which can lead to financial challenges, and
  • Find a value proposition for the products being offered.  Is it distinct and still relevant to customers?  If not, focus on product relevance and a customer proposition desires by your customer base. 
While her firm makes equity investments, primarily ranging from $250k-$500k and in some cases up to $2mm, IAF’s intent is to exit within 7-10 years.

But before you attract VC funding, your business has to be ready.  

What does it take? 
 
It takes more than just having great ideas, according to Cash, but more importantly you need a plan and an understanding of VC expectations and ultimately, what it takes for an investor to exit within 7-10 years.

When that happens, you have an opportunity to receive funding and potentially unlock and achieve significant growth.

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